Posts belonging to Category Motion Practice

A federal judge has denied Microsoft’s motion to dismiss a putative class action alleging that Microsoft sent spam text messages to consumers.  See Smith v. Microsoft Corp., No. 11-1958 (S.D. Cal. Jul. 20, 2012) (order denying motion to dismiss) (available here).  Microsoft had argued that the plaintiff could not establish “actual harm” and therefore did not satisfy federal Article III standing requirements.  Smith and other recent rulings, most prominently the U.S. Supreme Court’s ruling in Edwards v. First Am. Corp. (available here), have caused legal observers to revise expectations of a tighter Article III standing jurisprudence leading to more early dismissals in federal court.

The Smith action alleges that Microsoft sent unsolicited text messages to consumers promoting its popular Xbox gaming platform, in violation of the Telephone Consumer Protection Act (TCPA).  Microsoft sought an early dismissal of the action on the ground that the named plaintiff lacked Article III standing because he could not show that he suffered actual economic injury.  In particular, Microsoft emphasized that the named plaintiff had not incurred any additional cell phone charges due to the texts.  However, Judge Janis Sammartino rejected Microsoft’s argument, ruling that the TCPA confers standing irrespective of whether a plaintiff incurs charges or other direct pecuniary detriment, thus allowing the putative class action to proceed without proof of additional charges being incurred attendant to the spam messages. 

The ruling’s underlying reasoning has a potentially wide reach.  In addition to grounding her ruling in the TCPA’s overt language and legislative history, Judge Sammartino analogized it to other statutes designed to promote similar privacy protections, referencing the Wiretap Act (addressed in In re iPhone Application Litigation, 2012 WL 2126351 (N.D. Cal. 2012)), the Video Privacy Protection Act (addressed in In re Hulu Privacy Litigation, 2012 WL 2119193 (N.D. Cal. 2012)), and the Stored Communications Act (addressed in Gaos v. Google, Inc., 2012 WL 1094646 (N.D. Cal. 2012)).  Order at 9. 

The Smith action seeks statutory damages pursuant to the TCPA (which provides for a minimum of $500 per violation) as well as injunctive relief that would proscribe “all wireless spam activities” by Microsoft.

A federal judge in the Southern District of New York has rebuffed a defendant’s attempt to block class treatment using the aggressive tactic of moving to strike class allegations.  See Chen-Oster v. Goldman Sachs, No. 10-6950 (S.D.N.Y. Jul. 17, 2012) (Opinion & Order) (available here).  Defendant’s motion, largely premised on Wal-Mart v. Dukes (131 S. Ct. 2541 (2011)), attacked the plaintiffs’ class allegations based on commonality, predominance, and standing for injunctive relief.  See Opinion at 2-3.  Judge Leonard B. Sand denied the defendant’s motion except as to class allegations under 23(b)(2), holding that, under Dukes, only current employees would have standing to pursue injunctive relief as a remedy, and the class contained both current and former employees.  Id. at 15.  However, Judge Sand clearly took issue with this, stating that “. . . the Dukes majority’s blanket rule that always denies standing to ex-employees cuts too broad a swath”, but nonetheless followed that rule.  Id. at 13.

In distinguishing Dukes as to the commonality and predominance issues, the court emphasized that the Chen-Oster plaintiffs alleged specific, company-wide employment practices, in contrast to the generalized allegations in Dukes.  Id. at 4-5.  Additionally, Dukes’ historically massive proposed class size was not an impediment to certification, since “Plaintiffs do not number in the millions; Plaintiffs all worked at—and the allegations all center around—Goldman’s New York office.”  Id. at 7.

This is the second time that the Chen-Oster case had generated a notable ruling, the first having come in connection with the U.S. Supreme court’s AT&T Mobility v. Concepcion decision.  In that prior ruling, the court held that, notwithstanding Concepcion, “it remains the law of the Second Circuit that an arbitration provision which ‘precludes plaintiffs from enforcing their [federal] statutory rights’ is unenforceable.” Chen-Oster v. Goldman, Sachs & Co., No. 10-06950, 2011 U.S. Dist. LEXIS 73200, at *15 (S.D.N.Y. Jul. 7, 2011), citing In re American Express Merchants’ Litigation, 634 F.3d 187 (2d Cir. 2011). Chen-Oster thus has the unique distinction of generating significant interpretations of both of the Supreme Court’s two landmark class action rulings from 2011.

It may soon be up to the California Supreme Court to determine the applicable scope of AT&T Mobility v. Concepcion (131 S. Ct. 1740 (2011)) in California.  Specifically at issue is the Second Appellate District’s ruling in Iskanian, which created multiple conflicts within California courts.  Iskanian v. CLS Transp. Los Angeles, LLC, ___ Cal. App. 4th ___ (2012) (available here).  As expected, the plaintiffs’ attorneys have filed a Petition for Review (available here), arguing the necessity of California Supreme Court intervention to resolve the numerous conflicting decisions.

The Petition for Review casts the Iskanian decision as a distinct outlier in California law, focusing on several new splits of authority within the California courts engendered by the Iskanian decision and requiring Supreme Court review.  Foremost, the Petitioners point out that, in Iskanian, the Second Appellate District, Division Two, rejected Brown v. Ralphs, 197 Cal. App. 4th 489 (2011), which was decided by Division Five of the same court just one year ago.  Whereas Brown held that PAGA waivers are outside the scope of the Supreme Court’s Concepcion decision, Iskanian disagreed, extending the scope of FAA preemption considerably to cover PAGA claims based on violations of employees’ workplace rights.  By ruling as it did, the Petition argues, the Iskanian court has ignored the California legislature, effectively “dismantle[ing] the entire statutory design of PAGA.”  Petition at 4.

The Petitioners also emphasize that the Iskanian decision, by purporting to invalidate the California Supreme Court’s Gentry decision (Gentry v. Super. Ct., 42 Cal. 4th 443 (2007)), upends years of California law that had treated employers’ arbitration agreements essentially as “choice-of-forum” clauses that in no case could force employees to give up their substantive rights.  Petition at 4.  The Petition asserts that Iskanian also disregards United States Supreme Court decisional law on this point, noting that the high Court “has never endorsed the notion that ‘arbitration agreements must be enforced according to their terms’ regardless of whether enforcement would eviscerate a party’s substantive rights, as the Court of Appeal did here.”  Petition at 3.  Moreover, the Petition contends that Iskanian usurps the California Supreme Court’s role by attempting to overrule the Gentry decision, a step that cannot be taken by an intermediate appellate court.  Petition at 5-6.

The Petition vividly evokes the practical considerations at stake: “If this decision takes root, California employers will demand arbitration not because of its traditional benefits of speed, cost-effectiveness and informality, but because it is a means to make any contract enforceable, thereby avoiding any liability for violations of California law.”  Petition at 8.

The Petition is expected to attract considerable amicus interest on both sides.

Last week, in one fell swoop, a Los Angeles Superior Court Judge denied a defendant’s motion for summary adjudication and motion to decertify the plaintiffs’ rest break class, granted plaintiffs’ motion for summary judgment, and issued a $90 million award to a class of 15,000 plaintiffs, while following the California Supreme Court’s landmark ruling in Brinker v. Super. Ct., 42 Cal. 4th 1004 (2012).  See Augustus v. Amer. Commercial Sec. Servs., No. BC336416 (Los Angeles Super. Ct. Jul. 6, 2012) (order granting summary judgment) (available here).  The Brinker decision, initially touted as a win for defendants, continues to favor plaintiffs alleging meal and rest break violations.

Here, the plaintiff class, made up of security guards, sought damages for missed rest periods, claiming that they were “on call” during their breaks and therefore not “relieved of all duty” as required under Brinker.  Defendants contended that, because plaintiffs were not required to carry radios during rest breaks, they were per se off duty.  See Order at 2-3.  Judge John Shepard Wiley, Jr. countered defendant’s argument, pointing out that “[t]here are many alternatives to the radio for hailing a person back to work,” and categorically agreed with plaintiffs, stating, “[p]ut simply, if you are on call, you are not on break” and “these on-call breaks are all legally invalid.”  Id. at 2-3.

Judge Wiley took the defendant to task several times in the order (to great comic effect), for citing to an unpublished opinion (id. at 2); for being critical of the length of plaintiffs’ reply brief despite having submitted an opposition brief that “included 21 small font footnotes” (id. at 3); and for arguing a due process violation despite having “had an opportunity to be heard — repeatedly, and at length” (id. at 4).